innovate arkansas

Depositing checks for businesses used to require frequent trips to a local bank branch. Technology now offered by several banks in Arkansas allows businesses to deposit checks from an office computer.

Merchant deposit capture allows businesses to scan checks from their offices and electronically send the checks to the bank. The system requires a computer capable of supporting the required software and a custom scanner that costs between $360 and $1,360, depending on the volume of checks that need to be handled.

The original check then remains in the possession of the business operating the scanner, creating an obvious opportunity for fraud. Banks have implemented safeguards to minimize the risk that someone will attempt to deposit the same check twice.

ExpressDeposit is the name BancorpSouth Bank of Tupelo, Miss., gives to its merchant deposit capture offering. The technology has advantages for clients and his bank, said Bob Altoff, the Arkansas region president for BancorpSouth. Businesses gain because employees don't have to waste time or gasoline traveling to the nearest branch.

"They say, 'Time is money,' " Althoff said. "If you can save an hour's worth of time, you can save a lot of money."

But there is time involved in scanning. Althoff estimated scanning one check takes about 10 seconds, though the amount of time can vary depending on the scanner a business buys.

The scanner also allows clients to make deposits much later in the day. A company can deposit checks until just before 7 p.m. using BancorpSouth's ExpressDeposit.

BancorpSouth, which had about $1.9 billion in Arkansas deposits as of June 2007, provides customers with a list of scanners and hardware requirements needed to support the service.

Althoff said offering services such as ExpressDeposit is crucial to keep up with the younger generation.

"They want to do all their banking electronically. For whatever reason, they don't want to go to the branch," Althoff said.

Susan Blair, executive vice president at Bank of the Ozarks, said her bank began offering its version of merchant deposit capture - with an almost identical name, Express Deposit - at the beginning of 2008. Customers of Bank of the Ozarks, the second-largest bank chartered in Arkansas, can streamline accounting by scanning checks at multiple locations into a centralized deposit account. Some businesses needed separate accounts for each location before the technology's introduction, she said.

"We saw it as an opportunity to better serve our customers outside our state or in locations not near one of our branches," Blair said.

Bank of the Ozarks is encouraging businesses to sign up for Express Deposit by offering free scanners.

The possibility of fraud did not elude Bank of the Ozarks when it considered merchant deposit capture, Blair said. "We definitely understand the risks and have precautions built in to protect the bank and vendors," she said.

Bank of the Ozarks is selective about the clients it authorizes to use Express Deposit, Blair said. The service is provided to businesses with which Bank of the Ozarks has an "established relationship," Blair said.

Security was also a concern of First State Bank of Conway when it decided to introduce the service in September, said Brad Youngblood, cash management coordinator.

"There are several safeguards we go through to try and prevent that from happening," Youngblood said. "We are offering the service to many good clients we've had for several years. We go in and let them know the things that can go wrong."

So far, about six or seven First State Bank clients have signed on for the service, Youngblood said. The clients typically choose merchant deposit capture because they routinely receive checks with high dollar amounts and want access to that money as quickly as possible or because they deal with a high volume of checks. Offering the service is also an effort to keep up in the competitive banking industry.

"The reason was for customer service, because this is something you can ask any bank out there and they either have it or are working on it," Youngblood said.